Marketing debit and credit to millennials

In Latin America + the Caribbean

As we pointed out in Marketing to millennials in the U.S., this customer segment makes up a quarter of the world’s population, and they will dominate the global workforce by 2025. In Latin American countries (LAC), one in three consumers is a millennial1.

Latin American millennials have yet to reach their peak spending years, so there is a huge opportunity for financial institutions to offer credit and debit products to this growing segment.

The payments landscape

Consumer payments volume in LAC over 2012-2017 is estimated to grow at a compound annual growth rate (CAGR) of 10 percent, making it the second fastest growing region behind Eastern Europe2. But in LAC, only 39 percent of the population over 15 years of age has a formal banking relationship4, and card penetration is directly related to banking relationships.

Even in relatively advanced countries for payments like Brazil, almost half of the population still doesn’t have a banking relationship. Cash is used for 60 percent of purchases5. The opportunity for financial institutions is even more pronounced in Argentina, Colombia and Mexico.

Consumer payment volume in Latin America

An increase in household disposable income is driving higher spending, and card payments are estimated to grow by 10 percent as consumer spending is growing rapidly3. Credit card purchases are increasing and projections indicate that credit spending will continue to increase5.

Millennial attitudes and spending behaviors

Financial institutions need to understand the motivations, attitudes and behaviors behind the purchases that millennials make so they can establish good relationships now to secure millennial business in the future.

Millenials aren’t a homogenous segment and their needs vary by age, so you should approach them with unique products tailored to their lifestyles and attitudes. They are optimistic, digitally savvy, and they like to travel.

Although many find themselves currently in a challenging financial situation, they’re optimistic that their financial situations will improve in the future. They are also optimistic that both technology and education will lead to personal success as well as a positive change for society6.

Younger millenial vs. older millennial behaviors

Younger millenials born between 1991 and 2000 are early adopters who are extremely connected to technology, and more likely to use it for leisure rather than for business purposes. Older millennials, born between 1980 and 1990, have the highest spending power in this generation. They have rapidly evolving needs, as many quickly transition into full-time jobs, create new families, and buy homes.

Millennials also like to travel. In 2014, the average millennial spent up to 25 percent more on cross-border travel than older generations7.

Since millennials have significant cross-border profiles, it’s important for banks to create unique products that establish top-of-wallet loyalty from an early age.

A 2013 study of spending patterns in Brazil also revealed that younger millennials spend the least amount of money mostly on smaller-ticket transactions (using both debit and credit).

Their annual spending is gradually increasing as they gain spending power and momentum. And in a recent study, we found that a significant number of Brazilian millennials exhibit affluent spending behaviors7.

Compared to the U.S., Latin America has a younger base of online shoppers. In Mexico, the median age of online shoppers is only 30; in Brazil it is 32, whereas in the U.S. it is 438.

Total Annual Spending per Card, by Generation7

Issuers should use online channels to target millennials as they are a digitally connected generation driven by technology in their day-to-day activities.

Solutions to attract millennials in Latin America + The Caribbean

To be successful, issuers need to drive relationships and products that are digital, customized and relevant to millennials. We can help you pair insights with data, technology and tactics to attract and retain customers. We offer digital self-help tools and customized solutions for issuers, acquirers and merchants.

Product value proposition

Learn how to incorporate the most valued services and features to meet millennial priorities related to security, time optimization, money management, and planning and support for social causes.

Upgrading cardholders

Optimize high-value cardholders by offering them upscale products. By developing a profile for each segment based on specific traits, activities and triggers, we can help you implement an upgrade strategy that anticipates the upcoming needs and behaviors of millennial cardholders. We can also help you fine-tune this effort by changing the scores that are used for determining which customers qualify for upgrades. This will also help strengthen and develop enduring relationships with millennial customers.

Communication and promotion strategy

We will create a complete set of marketing materials including a digital communication strategy and promotional offers and to encourage the use of credit and debit cards as the preferred payment method.

Acquiring customers

Our spending analysis identifies average consumer behaviors by using a combination of merchant categories. The purpose is to create specific association rules to encourage card usage. For example, you can focus on department stores, clothing and restaurants rather than supermarkets and drugstores. E-commerce spending can also be an important piece of the strategy as it is more appealing to these cardholders.

Strategic cross-sell

Enhance existing cross-sell practices with strategic cross-sell tactics to address millenials’ preferred communication channels and generate greater response rates from campaigns. We can also help develop an effective acquisition strategy for younger millennials who haven’t yet reached their peak spending years, including the development of a multichannel marketing plan.

Millennial business retention plan

Develop a strategy for proactive retention and credit line management to retain millennial customers. As millennials grow older and more prosperous, their needs and expectations will evolve. Be proactive in identifying when cardholders move to the next step and offer upgraded products, credit lines and loyalty programs.

Disclaimer: The information, recommendations or “best practices” contained herein are provided “AS IS” and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. When implementing any strategy or practice, you should consult with your legal counsel to determine what laws and regulations may apply to your specific circumstances and what decision to make. The actual costs, savings and benefits of any recommendations, programs or “best practices” may vary based upon your specific business needs and program requirements. By their nature, recommendations are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Assumptions were made by us in light of our experience and our perceptions of historical trends, current conditions and expected future developments and other factors that we believe are appropriate under the circumstance. Recommendations are subject to risks and uncertainties, which may cause actual and future results and trends to differ materially from the assumptions or recommendations. Visa is not responsible for your use of the information contained herein (including errors, omissions, inaccuracy or non-timeliness of any kind) or any assumptions or conclusions you might draw from its use. Visa makes no warranty, express or implied, and explicitly disclaims the warranties of merchantability and fitness for a particular purpose, any warranty of non-infringement of any third party’s intellectual property rights, any warranty that the information will meet the requirements of a client, or any warranty that the information is updated and will be error free. Visa shall not be liable to a client or any third party for any damages under any theory of law, including, without limitation, any special, consequential, incidental or punitive damages, nor any damages for loss of business profits, business interruption, loss of business information, or other monetary loss, even if advised of the possibility of such damages.